Finance Minister Arun Jaitley chose to give a cold shoulder to the demands of Indian jewellery sector by not cutting the gold import duty, which is currently at a record 10 percent.
There were widespread expectations that some reduction in the import duty would be announced in the Budget. Also, some relaxation in the 80:20 scheme that was imposed by the Reserve Bank of India (RBI) last year, was expected.
Expressing anguish, Haresh Soni, Chairman of All India Gems and Jewellery Trade Federation said that the Indian gems and jewellery Industry is extremely disappointed with the Union Government
Budget Proposals as the finance ministry did not consider their plea of reducing the import duty component on gold and also abolish the stringent 80:20 norms.
“The 80:20 rules were the biggest impediment for smooth operations of imports and development of premiums on gold as the export relation to imports had no relevance and had built a big parallel economy. Bringing down customs duty would have also eliminated smuggling and remove involvement of any black money. The entire industry was waiting for a positive turn of events but was let down by the government. For the last three years the sector has been bleeding due to stringent measures adopted by the government, we would urge the Govt to end the ‘Gold Control Raj’ and rescue domestic Gems & Jewellery Trade from parallel economy and black marketing, by abolishing 80.20 rule and reducing import duty on gold” he added.
These restrictions on overseas purchases of gold were imposed to contain India’s widening current account deficit (CAD). Gold is the second biggest import item after crude oil in India’s balance of payment receipt. Though these measures served the purpose and gold imports fell significantly, helping the current account gap narrow, they also incited smuggling.
Source : moneycontrol.com